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Friday, November 19, 2010

"Europe is more than a nine year old currency"

Yesterday saw some interesting reactions from the German papers, in response to the increasingly likely Irish bail-out.

A leader in Die Zeit dismisses Herman Van Rompuy's “exaggerations” and “apocalyptic” comments (“if the Euro doesn’t survive, then the EU won’t survive”, he said earlier in the week), and so those of Chancellor Merkel who made a similarly dramatic statement only a few days ago. The leader asserts that “the European idea is more than an almost nine-year-old monetary community", arguing that the EU could function perfectly well without a single currency (hear, hear!).

It argues,

...you can thank the common market that anyone can, Europe-wide, sell their goods and services and be treated as if they were local there. And all of that would be the same without the Euro. A permanent change to a different currency would only make life a little bit more strenuous for your average citizen.

Dirk Heilmann in Handelsblatt captures many of the issues on the table in his piece’s titled: “Yet again we are saving Europe’s banks.” As the powerhouse of the euro zone, the Germans are expected to be picking up a reported third of the rescue package (!).

Now, with the rescue of Ireland, it has been clear from the beginning that it is essentially a bailout…The banking problems are so large that they overwhelm the land. So, again, we rescue banks: the Irish, their foreign creditors and the owners of Irish government bonds.

Yet Heilmann is sympathetic to the Irish plight:

The taxpayers should help Ireland’s credit institutions and their creditors, because Europe's banks are still ailing. Their compulsory rehabilitation is urgently needed.

He's also quick to dismiss Greek comparisons,

We are not talking about a country that has squandered these advantages like the Greeks and frittered away the Euro dividend...we are talking about a country, that, like Iceland, let its financial sector grow unattended for a long time, until the monster turned around and ate its master.